Kontoor Brands, Inc.

Greetings and welcome to Contour Brands Q4 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Karapetian, VP Corporate Development, Enterprise Strategy, and IR. Thank you. You may begin.

Thank you, operator, and welcome to Contour Brand's fourth quarter and fiscal year 2024 earnings conference call. Participants on today's call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to materially differ. These uncertainties are detailed in documents filed with the SEC. We urge you to read our risk factors, cautionary language, and other disclosures contained in those reports. Amounts referred to on today's call will often be on an adjusted dollar basis, which we clearly define in a news release that was issued earlier this morning and is available on our website at contourbrands.com. Additionally, participants should note that comparability with prior periods is impacted by the previously disclosed out-of-period duty charge recorded in 2023. Accordingly, in our following comments, comparisons to 2023 gross margin, operating income, and EPS do not include the impact of the 2023 duty charge. Reconciliations of gap measures to adjusted amounts can be found in supplemental financial tables, including today's news release. These tables identify and quantify excluded items and provide management's view of why this information is useful to investors. Unless otherwise noted, amounts referred to on this call will be in constant currency, which exclude the translation impact of changes in foreign currency exchange rates. Joining me on today's call are Contour Brand's president, Chief Executive Officer and Chairman, Scott Baxter, and Chief Financial Officer, Joe Alkire. In addition, we will be joined by Tom Waldron, Chief Operating Officer. Following our prepared remarks, we will open the call for questions. Scott?

Thanks, Mike, and thank you to everybody for joining us on today's call. 2024 was a banner year for Contour. We connected with more consumers in more categories, accelerated brand investments to drive market share gains, and initiated our project genius transformation. As a result, we delivered on our pivot to growth, expanded margins, and improved our capital allocation optionality while returning significant cash to shareholders. In what remains an uncertain environment, we are operating from a position of strength and executing at a high level. Let's discuss highlights from the year. As we reported last week, fourth quarter revenue and profitability were better than expected, The investments we are making continue to drive competitive separation in the marketplace. While the environment has been uneven, consumers are choosing our brands. We see this in the strength of our own digital business, which grew 11% for the year, including 16% growth in the fourth quarter. And this is leading to stronger partnerships in the wholesale channel. In 2025, We are actively exploring shop and shops and key retailers that will elevate our presence and provide a greater experience for our consumers. We also made progress diversifying our business into new categories. Non-denim bottoms, tops, and t-shirts grew mid-single digits in 2024 to approximately one-third of global revenue. Within that, our outdoor business grew at mid-teens rates. reflecting the investments we are making in product development and design. We expect to build on this momentum in 25 with another year of growth. Moving down the P&L, one of the hallmarks of our organization is a strong focus on operational discipline to drive shareholder returns, and 2024 was no exception. We significantly expanded margins and drove strong operating income growth. As a result, We generated approximately $370 million in cash from operations, allowing us to return almost $200 million to shareholders through our dividend and share repurchase program and further strengthen our balance sheet through voluntary debt repayments. Moving to Project Genius. A year ago, we outlined how Project Genius would enhance our organization, create considerable capacity for investment, and establish a world-class multi-brand platform. With our ERP implementation complete, team structure in place, and disruption from the pandemic fading, the timing was right to pull together the strategic initiatives from around the organization into one comprehensive project. And we progressed through the year. We raised our expected savings target to $100 million, with benefits starting to flow through our P&L in 2025. Today, I am pleased to share we have moved firmly into the execution phase and now see upside to our 100 million of combined gross margin and SG&A savings. Joe will unpack the specifics, but there are three areas of improvement we have clear line of sight to achieving. First, our global sourcing transformation will optimize our business for expanded category growth, drive greater efficiency in our sourced vendor network, and enhance our planning organization. Second, Back-end efficiencies will result in an improved shared platform that can scale with the addition of Helly Hansen while standing up enhanced data capabilities. And third, commercial optimization will drive improved product development capabilities, increased speed to market, and greater responsiveness to meet evolving customer demands. 2025 will be an important year for Project Genius, and we have the team in place to drive significant value for our organization The work we are doing will transform Contour into a best-in-class global multi-brand platform while improving our overall financial profile. Before I turn it over to Tom, a few closing remarks. After successfully completing our first two horizons as a public company, we are entering a new phase of growth for Contour. While the environment remains dynamic, we have proven the resiliency to navigate the current environment. We have been through multiple cycles and have navigated disruption throughout our careers, including the particularly challenging period of the past five years. Supported by our exceptional leadership team, the benefits of Project Genius, and now the upcoming addition of the iconic Helly Hansen brand, I am highly confident we are on the right path to drive strong value creation for all shareholders. Tom?